The Jakarta Stock Exchange continues to hit new highs, with the composite index hitting a new record on Friday (10/11/06) after Bank Indonesia (BI) dropped its key rate by 50 points to 10.25%.The composite index rose to 1,673.125 before falling off to close at 1,664.837. Interest was driven by buying in telecommunication and mining blue chips, dealers said.

The advances put the market’s growth up 42% for the year, making it one of the best performers in Asia, with analysts saying more highs are expected.

On Tuesday, BI cut its key rate for the sixth cut this year, after annual inflation plunged in October. A bank spokesman said BI would continue to act cautiously but it saw room for further cuts in months to come.

The economy was predicted to have moved faster in the third quarter, with exports booming and domestic consumption starting to pick up.

Seven economists polled by Dow Jones Newswires forecast gross domestic product in the July-September period to have expanded an average 5.53% on year, up from the second quarter's 5.22%.The government’s efforts to pitch a new investment climate in the infrastructure sector were boosted by a pledge to offer financial backing for private investors in state-sponsored ventures, The Wall Street Journal reported.

"The foundations for future projects are potentially there," the daily quoted Karin Finkelston, associate director for East Asia at the International Finance Corp., the World Bank arm for lending to the private sector, as saying. "The key now is how this is implemented."

Officials had highlighted 10 projects with a total value of $4.5 billion the government hopes will become models for private-public deals and pave the way for other investment. They include power plants, toll roads, water-supply projects, fiber-optic networks, a ferry terminal and a port.

Finance Minister Sri Mulyani Indrawati outlined a plan to earmark $450 million from Jakarta's 2006 and 2007 budgets to fund financial guarantees and offer other support for the projects.Also unveiled at the conference was a separate $300 million fund for government purchases of land for infrastructure projects, which would relieve private investors of long and difficult negotiations.Peter Eliot, the president director of Citibank Indonesia, told The Jakarta Post conditions were looking positive for next year.“If we look at the macro financial condition, the situation is improving and getting better here. I'm optimistic about next year,” he said, adding that the bank would retain its prudent position on loans.

Asked where he would project the growth figure of next year, he replied: Economic growth of 6.3% for next year is reasonable. Again I'm optimistic about next year. I think that in terms of various sectors of the economy here, whether it's oil and gas, mining, palm oil, or consumers goods, they've all got tremendous opportunities. So I certainly hope Indonesia will achieve the 6.3% growth. Perhaps it'll be higher.”